John Templeton's Five Steps for Financial Success

Note: Since Templeton wrote this in 1976, things are changing rapidly. India is finally pursuing market-friendly policies; consequently, India has one of the hottest stock markets around these days.

Minimize your taxes. In the 1960s, Templeton made a controversial decision. He decided to renounce his U.S. citizenship and move to the Bahamas, where there is no income tax or investment tax. He became a British citizen, and now a Bahamian citizen, and lives tax-free (the Bahamas gets its revenue from high import duties and corporate/trust fees).

Interestingly, his investment record improved markedly after he stopped worrying about the tax consequences of his investment decisions. As a result of tax-free compounding, Templeton is worth several billion dollars today, and is one of the wealthiest men alive. However, Templeton does not recommend that American investors follow his lead and switch allegiance to a tax haven such as the Bahamas (it's almost impossible for an American to become a Bahamian citizen today). But, Templeton strongly recommends that you should take full advantage of tax-deferral vehicles such as a corporate pension plan or an IRA, and incorporate your business.